-What will rising mortgage rates do to your monthly payments? Be sure to utilize our mortgage calculator to find out-

Instead of reiterating the specific influence rising mortgage rates has on buyers and refinancers, today we’re going to focus on what it will take for mortgage rates to trend back downward and what influence the Federal Reserve has on the future direction of mortgage rates.

What will it take for mortgage rates to fall?

For mortgage rates to settle back, we’ll need some poorer economic news. There have been a few signs of slowing:

• Institute for Supply Management index moved into “contracting” space two weeks ago
• The Fed’s “Beige Book” estimate of growth was marked down in the latest report

However, these were insufficiently weak to break the upward string of increases. Here’s what we’ll need:

• More evidence that growth is slowing from the 2.4 percent rate of GDP in the first quarter
• More data that inflation is soft or declining
• More clarity from the Federal Reserve that it sees no immediate reason to substantially change their program of purchasing mortgage-backed securities and Treasuries

But will that happen?

Fed intentions must be clear

The economic data will likely be clear enough, but the Fed may not be as clear.

Unfortunately, any Fed ambiguity might send the market reeling again, and the Fed has no doubt noticed (and should be a little concerned with) the plummet in mortgage applications for both purchase and refinancing over the past month.

Both the recasting of household debt though refinancing and the purchase of existing (and especially new) homes have important economic consequences, and have been key to the revival of the economy. However, it may well be, with a sizable number of refinances already completed, that the Fed may think that there is little more to be gained there from an economic-benefit standpoint.

At the same time, the ability to purchase a home with a 4 percent interest rate is still a highly viable and very compelling opportunity, so at least one widespread benefit of low mortgage rates would persist.

Mortgage rates: Is still all comes down to the economy

Into this fray comes the Fed this week with a two-day meeting concluding on Wednesday. From where we stand, there doesn’t seem to be any economic or inflation reason to do anything but continue QE for a while longer yet, followed by a gradual tapering process.

That said, a host of interest-rate-sensitive economic reports come out this week–a June report from the National Association of Homebuilders, a look at May’s housing starts and existing home sales, May’s CPI report, and a couple of looks at manufacturing health will provide bookends for the Fed meeting.

Will we get needed clarity from the Fed?

Probably not as much as we could use, and the economic data will probably be mushy enough as to not strongly suggest that the Fed should move one way or another, or how quickly.

Softer data would help mortgage rates to slip a little, but soothing words from the Fed after the meeting (or contained in the updated economic projections to be released at its conclusion) would allow for a more substantial fall in mortgage rates.

Tim Manni contributed to this post.

As of last week, mortgage rates maintained an upward trend for the sixth consecutive week, but the surge in rates–sparked by minutes from the Federal Reserve meeting, subsequent comments by Fed officials and moderate economic data–thankfully appears to be slowing.

Have mortgage rates risen too much?

From our perspective, mortgage and other interest rates have probably overshot the mark, at least based upon the economic and inflation climate in which the increases have occurred.

It is fairly commonplace for rates to drift downward but spike upward, which they have, only to later settle back somewhat. Given the state of underlying interest rates as the week ending June 14 came to a close, and dependent upon both a continuation of modest-to-moderate economic data and some soothing words from the Federal Reserve, mortgage rates may now have some space to fall. This expectation may be perhaps a little hopeful, but by no means unlikely.

Mortgage rates rose by less last week

HSH.com’s broad-market mortgage tracker–our weekly Fixed-Rate Mortgage Indicator—found that the overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming, jumbos) lifted by another five basis points (0.05 percent) to 4.15 percent, the smallest move of the recent uptrend.

The overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming, jumbos) added a like amount to its average, rising by five basis points (0.05 percent) to 3.33 percent for the week.

FHA-backed 30-year fixed-rate mortgages added just three basis points to move to an average rate of 3.77 percent, while the overall 5/1 Hybrid ARM moved upward by eight hundredths of a percentage point (0.08 percent) to 2.85 percent for the week ending June 14.

Four percent rates: Not the end of the world

When rates were falling and first approaching the 4 percent mark, there were throngs of cheering crowds ecstatic about the chance to borrow at multi-generational-low mortgage rates, and with good reason. Now that we have moved back to the 4 percent level, there should still be cheering, but instead there is some concern being expressed about damage to the housing market.

Despite recent increases, mortgage rates remain low by any stretch of the imagination, well below both five-year and 10-year average rates–and more than a full percentage point below the non-Fed-manipulated weekly low of 5.24 percent for the conforming 30-year fixed-rate mortgage rates set back in June 2003. Mortgage costs have increased from recent bottoms–not a welcome happenstance, by any means–but still remain considerably below both the intermediate and longer run norms.

Mortgage rates should fall this week

It is always dicey to forecast mortgage and interest rates during the week of a Fed meeting, so with fingers crossed, and based upon how the markets closed last week, we think there’s a good chance that rates will fall by a few basis points (possibly more) by the time we get to the end of this week.

That short-term shock is bound to wear off as borrowers realize that 4 percent mortgage rates aren’t the end of the world, and they are, in fact, still historically low.

But the true barometer of the long-term impact of rising rates will be layoffs. Eventually, rising rates will force banks to shed positions as there just won’t be enough work to go around.

We’re already seeing signs of this trend forming at banks across the country.

Layoffs announced

Last week, JP Morgan Chase announced the layoffs of approximately 1,800 people in their mortgage servicing unit. This layoff isn’t the declaration of the end of the nation’s longest refi boom or a recovering real estate market grinding to a halt. Instead, it’s a sign that the pool of new mortgage customers is much improved, reducing the number of delinquent borrowers banks have to deal with.

Years of stringent lending conditions have brought highly qualified borrowers through the door. CNBC reported that the bulk of JP Morgan’s recent layoffs have come from its mortgage servicing unit, which is responsible for collecting payments from delinquent borrowers. Fewer delinquencies have caused servicing units to shrink at banks nationwide, said CNBC.

Even Bank of America, who has been mired in bad loans since their acquisition of Countrywide in 2006, has seen their pool of delinquent loans shrink appreciably in the last year alone.

What’s ahead for mortgage rates?

Will mortgage rates ease again? Probably. Mortgage rates tend to rise much faster than they fall, leaving some room for them to tick back downward.

Rising rates will slow refinance activity, that’s just a fact. You can monitor weekly mortgage application numbers to get a short-term gauge of mortgage activity. But perhaps the best barometer of how rising mortgage rates are hurting activity over the long term will be job loss.

To what degree will this eventual job loss hurt the economy? That remains to be seen. When you see banks begin to seriously layoff mortgage employees, you’ll know rising rates have made their presence felt in the market.

For some people buying a home, the amount of paperwork required may seem a bit overwhelming. I remember when I was in the process of buying my first home, I kept thinking “Why don’t you just ask me for my first born, already?” I felt like some of the information asked from me wasn’t even necessary. For example, why exactly do lenders need to have all pages of my bank statement? Don’t they just need to see my balance and that’s all?

Well, it wasn’t until I started working in the financial industry and bought my second home, that I understood some of the reasons behind these requests from the mortgage banker.

Verification of Assets When Applying for a Loan

First, let’s talk about why you need to provide up to 30-day history. The bottom line is that lenders need to verify that all assets included in the loan application belong to the person(s) applying for the mortgage loan. The best way to do that is by looking at, at least, a month’s worth of statements.

A few things to keep in mind

• If there are any additional deposits made to your account, in addition to your regular income, be prepared to document where these funds came from. If, for example, these funds came from a separate savings account, then you’ll have to present a 30-day history of that account, as well.

• Lenders have to verify all the assets that will be used for your home purchase. They will be looking into your cash flow and make sure you have the funds needed to close on your loan and to make the monthly payments. They also need to verify that the information provided on the loan application matches these statements.

• If you’re thinking about using unsecured funds (i.e. a cash advance on a credit card) – don’t! These types of funds can’t be used to buy a house. Besides, you wouldn’t want to pay incredibly high interest rates on this cash advance, would you? You would be basically paying interest on interest.

• If your parents/aunt/uncle/cousin/grandma were thinking about helping you pay for your new home, keep in mind that, depending on the type of mortgage loan you’re getting, the person giving you this awesome gift may have to provide bank statements of the account(s) the money is coming from.

• If you apply and take out another loan while in the process of getting your home loan, then your mortgage banker will have to take that new loan into account and recalculate how much you qualify for. In other words, avoid getting new loans or credit cards while you’re in process of getting a mortgage.

So there you have several reasons why your mortgage banker asks you for all these documents. And you even got some additional tips on what to expect as you’re going through the asset verification process. Even though gathering all these statements is sometimes painful, it is so worth it because, at the end, a home will be all yours to enjoy!

Related Links:

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“The rise in mortgage rates continues unabated again this week,” said Keith Gumbinger, vice president of HSH.com. “Although the size of the increase was smaller, it is still unwelcome as the housing market tries to gain momentum.”

Despite increases over the past month and a half, mortgage rates remain very favorable. “With a $200,000 loan amount, the difference in monthly payment from recent fixed-rate lows to today’s average amounts to about $66 more each month,” notes Gumbinger. “That may be enough to quash a refinance, but shouldn’t be a major setback for a home purchase transaction.”

Borrowers wishing to see how the recent rate increase might affect their costs are encouraged to use HSH.com’s mortgage payment calculator.

The Federal Reserve meeting next week is likely to impact future rates, says Gumbinger. “If the Fed signals that QE programs are coming to an end soon, mortgage rates may rise some more, but soothing words about a longer continuation of the programs or a very slow tapering process would provide some space for them to retreat a little.”

Average mortgage rates and points for conforming residential mortgages for the week ending June 11, according to HSH.com:

Conforming 30-year fixed-rate mortgage

• Average rate:   4.08 percent
• Average points: 0.26

Conforming 5/1-year adjustable-rate mortgage

• Average rate:   2.80 percent
• Average points: 0.17

Average mortgage rates and points for conforming residential mortgages for the previous week ending June 4 were, according to HSH.com:

Conforming 30-year fixed-rate mortgage

• Average Rate:   3.99 percent
• Average Points: 0.23

Conforming 5/1-year adjustable-rate mortgage

• Average Rate:   2.74 percent
• Average Points: 0.17

Borrowers took advantage of near-record-low mortgage rates to continue to strengthen their financial position, Freddie Mac Chief Economist Frank Nothaft said in a statement.

“In total, borrowers who refinanced will save approximately $7 billion in interest payments over the next 12 months, which they can put towards savings, paying down debt or to support additional expenditures,” Nothaft said.

Low fixed-rate loans

More than 95 percent of borrowers who refinanced during the first quarter obtained a fixed-rate loan, Freddie Mac said.

Sixty-eight percent of borrowers kept the same loan term. Twenty-eight percent shortened their term, and 3 percent lengthened it.

Slightly more than 20 percent utilized the Home Affordable Refinance Program (HARP), which allows some property owners to refinance even if they owe more than their property’s current value.

HARP borrowers refinanced loans with a median age of about 6 years and obtained new loans with an average interest-rate reduction of 2.1 percent, Freddie Mac said. Non-HARP borrowers refinanced loans with a median age of 4.1 years and obtained new loans with an average interest-rate decline of 1.6 percent.

Less cashing out

Home equity cash-out activity remained at a low level during the quarter.

Eighty-five percent of borrowers who refinanced obtained a new loan for the same amount or lowered their principal balance by cashing-in additional money at closing, Freddie Mac said.

Borrowers cashed out an estimated $8.1 billion, approximately the same amount that was cashed out during the previous quarter and substantially less than the peak cash-out volume of $84 billion in the second quarter of 2006.

“The estimated $8 billion in cash-out activity will further augment borrowers’ investment and consumption spending,” Nothaft said.

The refinance boom, now in its fourth year, appears to have peaked as loan activity has begun to shift toward purchase-money applications. That trend might be expected to continue as interest rates have risen in recent weeks, making refinancing less attractive.

If anything, the waters became even more muddied last week as it pertains to any impending change in the Fed’s QE policies. The latest data didn’t suggest enough strength as to tilt the scale toward a hastened exit, nor was there enough weakness to swell hopes that the Fed’s process of buying mortgage-backed securities and Treasuries will continue for a longer stretch yet.

While not exactly limbo, it does make it more difficult to know what to expect. The Fed next meets to discuss policy on June 18 and 19, and will release an update to their own economic projections at that time. Until then, the markets will continue to ruminate over where we go from here, and how quickly.

Mortgage rates rising

This will occur in the context of the highest mortgage rates in a years’ time. Despite remaining well below historic norms and “natural” record lows (those achieved pre-Fed market manipulations of the last five years), at least a few folks have expressed concerns about mortgage rates–especially conforming 30-year fixed rates–reaching a 4 percent level.

HSH.com’s broad-market mortgage tracker–our weekly Fixed-Rate Mortgage Indicator–found that the overall average rate for 30-year fixed-rate mortgages (conforming, non-conforming and jumbos) powered ahead by another nine basis points (0.09 percent) to 4.10 percent a rise of nearly a half-percentage point in five weeks’ time.

At the same time, the overall average rate for 15-year fixed-rate mortgages (conforming, non-conforming and jumbos) bounded upward by another seven basis points (0.07 percent) rise to 3.28 percent for the week.

Need to calculate your monthly payments? Be sure to use HSH.com’s mortgage calculator

FHA-backed 30-year fixed-rate mortgages added another 10 basis points to jump to an average rate of 3.74 percent, while the most popular ARM–the 5/1 Hybrid–moved the least amount of the bunch, with just a seven hundredths of a percentage point (0.07 percent) upward bump to 2.77 percent for the week ending June 7.

Fed sees little economic growth

There is a sort of balance in the latest economic data, leaving little suggestion that there is any upward trend in growth forming. In fact, there may have been sufficient deceleration of late to lean slightly more in favor of keeping QE around for a while longer yet. The Fed’s own regional survey of economic conditions covering the six weeks ending May 24 said as much. The “modest to moderate” overall review of the expansion in the latest report was a notch below the “moderate growth” reported in the prior survey to April 5.

Mortgage rates in ‘former-record-low territory’

So here we are, with mortgage rates no longer hanging very near record lows, but instead holding in former-record-low territory. The fact is that the economic news out last week wasn’t poor enough to help rates decline, nor was it strong enough to suggest that the Fed will go away quickly, or even soon.

The nation’s rate of unemployment ticked back up by a tenth-percentage point, to 7.6%, but that was due not to more firings, but rather to an increase in the size of the nation’s workforce, as the labor force participation rate nudged off the recession bottom of 63.3% (to all of 63.4%) for the month.

It is unlikely that any clarity will come as a result of new data out this week, and mortgage rates seem likely to be firm with perhaps an upward bias until the Fed chimes in a week from Wednesday. For mortgage rates, the rise seems to have slowed, if not stopped, and we expect our Fixed-Rate Mortgage Indicator to tick up by perhaps four basis points by the time the week is through.

A study released in February of 2013 by the National Association of Home Builders says one of the most important qualities new home buyers want is an energy-efficient home. They add, “Nine out of ten buyers would rather buy a home with energy-efficient features and permanently lower utility bills than one without those features that costs 2% to 3% less.”

The problem is that some sellers boast “energy-efficiency” without really having the goods to back it up. And just because the home has energy-efficient appliances doesn’t necessarily mean it’s saving energy in other areas.

Having a holistic approach to energy-efficient homes is a much better way to go for both savings and reduction in energy dependency. So when you start your house hunting adventures, bring this list with you and look for these features:

• ENERGY STAR appliances
• Air leaks around windows and doors
• Energy-efficient windows and doors
• Low-flow fixtures and toilets
• Digital thermostat controls
• Properly insulated attics and walls
• Low-energy lighting systems
• Well-maintained heating and cooling system
• Eco-friendly carpet, paint and building materials
• Energy-or water-efficient landscaping plan
• Tankless water heater
• BONUS: solar panels, geothermal system, wind turbine or any other alternative energy source

After you’ve gone through the list above you’ll want to ask some these questions:

• When was the last energy audit conducted and can you see the results?
• Can you see past energy bills?
• Do you have maintenance records for any of the energy-efficient appliances or alternative energy sources?
• Are there any local or state tax credits for owning this home?
• Do local energy companies buy back energy created by my home?
• Does the current homeowner work with the ENERGY STAR home program?

LEED Home Certification

In some cases, homes will feature LEED certification as a key selling point. A home with LEED certification means that it met specific environmental standards established by U.S. Green Building Council (USGBC). Ask to see the documentation from their LEED inspection and the certification.

Your new energy-efficient home doesn’t have to have all of these qualities, but each of them can help lower your energy dependency and monthly bills. Not only are these types of homes a smart buy, but energy-efficient features can also increase your home’s value if you decide to sell the home later on.

In July of 2012, USA Today reported that homes featuring energy-efficient upgrades sold for 10% more than non-energy-efficient homes in the surrounding area. They added in an earlier story that, “In Seattle, homes certified as eco-friendly sold for 8.5% more per square foot and were on the market 22% less time than other homes, according to a new report that tracks new home sales from September 2007 through December 2009.”

Buying an energy-efficient home is a smart investment that can pay off each month and later in the future. Just make sure to ask the right questions and look for the right features so you don’t get stuck in a home that doesn’t meet your expectations.

Would you rather buy an energy-efficient home or make renovations to your current home so it’s more energy-efficient? Share your thoughts with other Zing readers!

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The report has two sets of statistics, one for detached houses that builders completed last year and another for detached houses that builders sold last year.

Of the 483,000 new houses that were completed:

• 55 percent had two or more stories
• 41 percent had four or more bedrooms, and just 13 percent had only one or two bedrooms
• 30 percent had three or more bathrooms, and just 7 percent had only one or one-and-a-half bathrooms
• 30 percent had a full or partial basement while the rest had either a crawl space, slab or other type of foundation
• 89 percent had air-conditioning, 58 percent had a warm-air furnace and 38 percent had a heat pump as the primary heating system
• 59 percent had a gas-powered heating system, and 39 percent had an electric-powered heating system

The completed houses were 2,505 square feet, on average.

Buying a home? Calculate your monthly mortgage payment with HSH.com’s mortgage calculator

Of the 368,000 new houses that were sold:

• 91 percent had a garage that could shelter at least two cars, with 70 percent having a two-car garage and 21 percent having a garage large enough for three or more cars
• 53 percent had at least one fireplace with 48 percent having exactly one and 5 percent having two or more.

The sold houses were built on a lot of 15,634 square feet, on average.

Rise is multigenerational households

One reason why large houses with so many bedrooms and bathrooms might remain popular is a slight rise in the proportion of households that are multigenerational, defined by the Census Bureau as having three or more generations living together.

In 2000, 3.7 percent of U.S. households were multigenerational. By 2010, that figure had ticked up to 4 percent.

A Census Bureau survey brief observed, “Multigenerational households may be more likely to reside in areas where new immigrants live with their relatives, in areas where housing shortages or high costs force families to double up their living arrangements, or in areas that have relatively high percentages of children born to unmarried mothers who live with their children in their parents’ homes.”

The average rate for conforming 30-year fixed-rate mortgages jumped by 19 basis points (0.19 percent) to 3.99 percent. Conforming 5/1 Hybrid ARM rates increased by 10 basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.74 percent.

“Bond and mortgage markets continue to prepare themselves for an early exit by the Fed,” said Keith Gumbinger, vice president of HSH.com. “Up until recently, expectations were that the Fed would begin to taper purchases of mortgage-backed securities (MBS) and Treasury bonds late in 2013, but that timeframe appears to have moved to September, possibly sooner.”

The Federal Reserve continues to purchase a total of $85 billion per month in MBS and Treasuries to help keep interest rates low and mortgage markets liquid.

“Before the Fed begins to pull back, we will need to see a lot more solid economic data, especially in labor markets. The news of late suggests that the economy is holding its own, but little more, and that’s with QE still fully in play. It could very well be that investors are getting ahead of themselves, given the lack of compelling evidence that the economy is ready to run without these supports,” adds Gumbinger.

Still, he acknowledges, without a spate of weak data, mortgage rates are less likely to decline, or decline significantly. This is discussed in greater detail in HSH.com’s latest Two-Month Forecast for mortgage rates.

Refinance applications take a nose dive

Given the steep mortgage rate increases as of late, it’s no surprise that mortgage applications are down. According to the Mortgage Bankers Association, overall applications were down 11.5 percent for the week ending May 31.

While purchase applications were down just 2 percent for the week, refinance applications took a 15 percent dive and sit at its lowest point since the end of November 2011, according to the MBA. This steep decline brought the share of refinance applications down to 68 percent of total applications, its lowest level since July 2011. This marks the fourth week in a row refinances have declined.